We recently saw a lot of attention paid to the Hive Backed Dollar and for good reason. After the Witnesses increased the APR to 20%, this became one of the more attractive stablecoins on the market. We now have a strong return without any 3rd party risk. Unlike many other stablecoins where the staking has to be done through a second layer application, with the HBD in savings, that is all base layer.

After the announcement, many were wondering if people would abandon Hive Power for HBD. This obviously turned out to be unfounded as the amount of Hive locked up as HP is not changed that much. It is a vital point as we will see in a few moments.

Hive Backed Dollars (HBD) hold great appeal and merit the recent attention. We need to keep in mind the potential of HIVE along with all the benefits of staking it.

For that reason we will compare the two in an effort to give some clarity to people.

As always, this is for educational purposes only and not investment advice.

Hive Power

Hive, when staked, becomes Hive Power and increases people's influence on chain. This pertains to all governance issues along with the distribution of the reward pool. It also provides access in the form of Resource Credits (really Mana) as a result of the amount of Hive powered up.

Therefore, Hive Power carries a bit more value to users in addition to a simple ROI. This is something we must consider.

When everyone saw the 20% APR on HBD, the focus instantly shifted to that. Since Hive Power does not passively pay that, many felt the inclination would be for everyone to shift into that. The aforementioned reasons certainly played a part in that not coming to pass.

There is another factor that is essential: speculation.

HIVE is a volatile asset. The price can fluctuate greatly. Many feel the long-term trajectory of the coin will eventually be upward. For this reason, it is not unrealistic for it to move 400% or 500%.

Here is where we see a major difference entering. This is coupled with the fact that smaller accounts can easily have a triple digit growth rate. For this reason, in comparison, the 20% annual return could pale in comparison to this.

Here is the key: this is all potential. The returns are not guaranteed. Nobody can assure a triple digit growth rate on a smaller account nor can we state with any certainty if the price of HIVE will go up. Like any asset, there is the possibility it goes down.

It is why this is speculation. The return depends upon what people do along with market activity. There could be a large return. We also see where the path to loss exists.

HBD

There is no way to deny the appeal of HBD in savings now that it is paying 20%. It is a rate that is one understands compounding along with the state of the existing financial system should get people's mouths watering. The possibility for long-term growth, both of individual accounts and the entire ecosystem, are enormous.

From a personal perspective, there is little doubt that HBD is a pathway to wealth building. When we compound 20% over the course of a couple decades, with additional contributions, that can easily result in millions. The is how powerful this rate of return is.

What this does is it puts Hive at the forefront of the fixed income market. Globally, the money invested in this realm dwarfs that of speculation plays. It also helps to usher in a new era for cryptocurrency: the focus upon yield.

Instead of everyone seeking to "moon" their holdings in a few months, the goal is to build over an extended period. Here is where the power of compounding enters the picture.

Over time, the rate of return could be less but then the risk associated with putting HBD in savings is reduced.

Risk Tolerance

The decision to go with HBD or HIVE comes down to a simple notion: what is the risk tolerance with this particular money.

We can easily see how the holding of HIVE versus HBD is a completely different risk model. Those who are willing to move up that scale are willing to "bet" on the price of HIVE eventually moving higher. For this, they are also taking on the potential for loss.

So far we framed this discussion as one of different types of investors. It is true that speculators versus yield hunters are completely different. Yet, they can also reside within the same person and certainly within an individual portfolio.

The answer to the question of HBD or HIVE is often both. Certain money belongs in the fixed income category while other resources can be applied to the speculation arena. It all comes down to the risk management structure one is applying and how he or she wishes to build a portfolio.

For anyone on Hive, the best part in all this is options are being provided. The fact that people have serious choices to make is important. There are now opportunities to structure one's financial matters in a way that meets individual needs while also generating a return that will eventually make a difference.

By working within one's risk tolerance framework, we can see how people are able to decide where they want to put their money to fit their needs.

As of now, Hive offers selections that can appease both the speculator and yield seeker, even if they are the same person.

What are your thoughts on both these coins? Which options do you feel is right for you?

Let us know in the comment section below.

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